Do Kwon Fights Back: Opposes SEC's Terraform Labs Probe

Terraform Labs' Founder, Do Kwon, has opposed attempts by the US Securities and Exchange Commission (SEC) to extradite him for questioning regarding the collapse of Terra LUNA and the stablecoin TerraUSD.

Kwon's defiance became evident with a recent court filing, submitted in the US District Court for the Southern District of New York, where he seeks to dismiss the SEC's request for his testimony in the US. His legal team said such a step is impossible due to Kwon's detention in Montenegro. Additionally, the filing states that compelling him to provide a written testimony would infringe upon his rights under the laws of the US.

Do Kwon Contests SEC's Extradition Pursuit

In a statement within the filing, Kwon's lawyers said: "The SEC's motion seeks leave to take the deposition of Defendant Do Kwon in the United States before October 13, 2023, even though the SEC knows that Kwon is detained in Montenegro with no scheduled release or extradition date. The motion should be denied because it would be impossible for Kwon to appear for such a deposition."

The SEC's legal pursuit of Terraform Labs dates back to February when they filed a lawsuit accusing the company of misleading investors regarding the safety of investing in TerraUSD. Investors were assured that TerraUSD would maintain its peg to the US dollar through a complex mint-burn system involving its sister coin, LUNA. However, the downfall of both TerraUSD and LUNA in May 2022 resulted in an estimated loss of $50 billion to investors.

Currently, the US and South Korea are seeking the extradition of Kwon. In March, Montenegro's Minister of Justice, Marko Kovac, revealed that a judge will ultimately determine whether Kwon will be extradited to the US or South Korea, Bloomberg reported.

Kwon, who served as the CEO of Terraform Labs, was hit with criminal charges in March by federal prosecutors in New York. The charges were brought against him just hours after his arrest in Montenegro.

Do Kwon Faces Eight Counts of Charges in the US

The federal court in the Southern District of New York officially filed eight charges against Kwon, all related to his alleged involvement in the ill-fated stablecoin project. These charges include commodities fraud, securities fraud, wire fraud, and conspiracy to defraud and engage in market manipulation.

In addition, previous reports indicate that the Federal Bureau of Investigation (FBI) and the prosecutors from the Southern District of New York are actively investigating the collapse of TerraUSD. This investigation includes interviews with former employees of Terraform Labs.

In June, Kwon was handed a four-month jail sentence by a court in Montenegro for alleged possession of forged passports and travel documents. This verdict also applied to Han Chong-Joon, the former Chief Financial Officer at Terraform Labs, who faces identical charges.

Kwon and Chong-Joon were arrested in March in Montenegro as they were attempting to board a plane bound for Dubai. The court disclosed that fake Costa Rican and Belgian passports and falsified identity cards were confiscated from the executives during their arrest.